Motorists assess impact as oil prices surge again, nearing $120 amid tightening global supply flows.
Dubai: UAE motorists are unlikely to see a significant drop in fuel prices for May, with rates set to be announced later today, even as global oil markets surge once again.
Crude prices have jumped sharply, adding fresh upward pressure—but the timing is too late to meaningfully impact May fuel rates.
Brent crude climbed to $119.69 per barrel, rising 7.6 per cent on Wednesday—its highest level since early 2022, during the initial phase of the Ukraine war. Prices have surged from around $70 prior to the conflict, with repeated spikes above $119 in recent months.
The latest rally follows Iran’s effective closure of the Strait of Hormuz, a vital chokepoint for global oil shipments, tightening supply and driving prices higher.
How UAE fuel costs will change
The UAE sets fuel prices based on the previous month’s average oil price, creating a lag effect:
- April prices reflected March’s sharp surge
- May prices are based on April averages, which were relatively lower than current levels
Likely direction for May:
Fuel prices may see a modest increase or remain relatively stable, with the recent spike in global oil prices more likely to influence June rates rather than May.
Likely direction for May:
- Petrol prices: Stable or slightly lower
- Diesel: Likely to remain elevated
- Overall trend: No repeat of April’s surge, but only limited relief
Despite oil nearing $120 again, May pricing is effectively locked in based on April averages. This means the latest rally is unlikely to push May rates higher at this stage, but will have a stronger impact on June prices.
Why prices won’t fall faster
Oil prices had eased earlier, but recent developments have reversed that trend. The Strait of Hormuz is now effectively constrained, disrupting tanker movement through a route that carries about 20 per cent of global oil supply. This has tightened flows and driven prices sharply higher.
There is little clarity on a resolution. While Iran has linked reopening the Strait to changes in US policy, there are no clear signs of a breakthrough. Markets are reacting more to supply disruption than to diplomatic progress.
At the same time, supply risks are not absolute. Iran has continued exporting crude despite restrictions, with shipments still finding routes through the region—suggesting flows are disrupted, but not completely halted.
What happens after a spike
Past UAE fuel pricing cycles show a consistent pattern:
- Sharp increases are typically followed by partial pullbacks, not immediate reversals
- Prices tend to stabilise over one to two months before a clearer trend emerges
- Diesel often lags on the downside due to tighter global supply
This suggests May will likely act as a holding phase, even as global oil markets heat up again.Scenarios for May fuel prices
For May:
- Base case: Petrol remains broadly stable or edges slightly lower, while diesel stays elevated
- Upside risk: A marginal increase in petrol if late-April strength is factored into pricing
- Downside possibility: Limited scope for meaningful declines given earlier firmness in April averages
Overall, May is likely to reflect a pause rather than a clear directional shift, with more pronounced moves deferred to June.
Scenarios for May fuel prices
For May:
- Prices will reflect April averages
- Rates likely to remain stable or edge slightly lower
For June:
- Oil holding near or above $110–$120 could push prices higher
- Continued disruption in the Strait of Hormuz would sustain upward pressure
When costs could ease:
- Shipping through the Strait of Hormuz normalises
- Diplomatic progress reduces supply risks
- Oil retreats from current highs
What motorists should watch
The outlook now depends on oil flow stability and how long current disruptions persist. Key factors include:
- Whether Brent crude holds near the $110–$120 range
- Developments around the Strait of Hormuz
- Any progress in geopolitical negotiations
April reflected the peak shock. May will indicate whether markets are stabilising or still under pressure, while June pricing is likely to more fully capture the latest rebound in global oil markets.
